THOUSANDS of workers could see their redundancy pay packets slashed in a big rules shake-up.
The government is looking to cut back on “special severance payments” (SSPs), which are payouts given to public sector staff when they leave their job.
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Public sector workers include those working in healthcare, education, social work, the police, and the government itself.
How much money you can get under an SSP payout varies on a case-by-case basis – but you can get more than £100,000.
They are offered when a worker resigns, is dismissed, or is made redundant.
However, a rule change means they should only be offered in “exceptional cases”.
New guidance from the government issued yesterday cracked down on public sector bodies making SSP payouts.
It said: “Most public sector workers enjoy statutory and contractual redundancy or severance terms that are significantly better than the minimum statutory redundancy entitlement and are often higher than the value of redundancy or severance payments made in the private sector.
“The government is of the view that paying additional, discretionary sums on top of these entitlements (special severance payments) do not usually provide good value for money or offer fairness to the taxpayers who fund them and so, should only be considered in exceptional cases.”
It said they should only be offered to settle disputes and when they make financial sense, for example.
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Public sector bodies will also have to justify making these payouts, with evidence.
It means that these generous packages will become less common and less widely available to workers.
What are your redundancy rights?
If you get made redundant, then you are entitled to a number of rights – we explain below.
These rights apply to those working in the private sector too.
If you’ve been told you’re going to be made redundant, the first thing you should do is check that your employer is conducting the process fairly.
Employers are not allowed to discriminate against workers when they ask them to leave.
Workers that have been with the same employer for at least two years are able to challenge the redundancy in some cases, Citizens Advice said.
You can challenge the job loss if you think that there wasn’t a genuine need to cut staff numbers or if your employer didn’t follow a fair selection process.
You can also challenge the decision if you think there was discrimination.
Pay
You will get statutory redundancy pay if you have worked for your employer for two years or more.
The statutory rate is based on your age, weekly pay and number of years in the job.
You will get:
- Half a week’s pay for each full year you worked aged under 22
- One week’s pay for each full year you worked aged 22 or older, but under 41
- One and half week’s pay for each full year you worked while aged 41 or older.
Length of service is capped at 20 years. Limits for statutory amounts will change when a new tax year begins in April.
In England, Scotland, and Wales the maximum amount of statutory redundancy pay is currently £17,130 if you were made redundant after April 2022.
You can calculate how much redundancy pay you’ll get using a pay checker tool on the gov.uk‘s website.
Holiday pay
You are still entitled to any pay you are owed for untaken holiday days at the end of your notice period.
Or, your employer has to let you take the days off before you leave.
If you have taken more days than your annual entitlement then your employer is within their legal rights to dock this from your final pay settlement.
We’ve also covered your rights around holidays, pensions and statutory pay if you’re made redundant.
Some employers could pay staff who work from home less money – here’s everything you need to know about whether your boss can cut your salary.
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